6 September 2021
Yes. In Maria Amparo M. Dato, et al. v. Commissioner of Internal Revenue (CTA EB No. 2253 (CTA Case No. 9321), June 30, 2021), the CTA En Banc ruled that it has jurisdiction to rule on the validity of a Revenue Memorandum Circular (RMC), which was previously declared void by a Regional Trial Court (RTC).
This case involves a claim for refund of income taxes filed by the petitioners, who are current and former employees of the Asian Development Bank (ADB). In a separate proceeding before an RTC, other ADB employees filed a petition to nullify the provision of RMC No. 31-2013, which states that only the officers and staff of ADP who are not Philippine nationals shall be exempt from Philippine income tax. The RTC declared this provision of the RMC void. After learning of the RTC’s decision, the petitioners in the CTA case filed applications for refund of their income tax payments.
The CTA En Banc ruled that it “can rule not only on the propriety of an assessment or tax treatment of a certain transaction, but also on the validity of the revenue regulation or revenue memorandum circular on which the said assessment is based.” It further ruled that this doctrine also applies to claims for refund, such as this case. The CTA En Banc then ruled that RMC 31-2013 is valid and denied the petitioners’ claim for refund of their income tax payments.
SyCipLaw Tip: A taxpayer-litigant should note that the CTA may rule on the validity of any BIR’s issuance so long as it is within the CTA’s appellate jurisdiction. Thus, if a taxpayer is assailing an assessment before the CTA, the taxpayer may raise the constitutionality or validity of a BIR issuance, which is the basis of the assessment, in the same proceeding.
A motion for reconsideration of the decision of the CTA En Banc is currently pending.
CTA decisions, while persuasive, do not form part of the law of the land, unlike decisions of the Supreme Court.
For further information, please contact:
Carina C. Laforteza, Tax Department Head,
SyCip Salazar Hernandez & Gatmaitan
cclaforteza@syciplaw.com
